1. SWOT as a Strategic Management Tool
Dr. Fred Mugambi Mwirigi
JKUAT

2. Meaning of SWOT
Strengths
Weaknesses
Opportunities
Threats

3. Strengths Organizational capacity to take advantage of opportunities
Could be finances, HR, Technology, etc
Organizational Strength is:
Internal
Controllable
Has a direct immediate effect on performance

4. Weakness
The in ability to not only capitalize on opportunities but also defend oneself from threats
Could be lack of adequate capital, HR, Technology, etc.
Weaknesses:
Are internal
Controllable from within
Have a direct immediate effect on performance

5. Opportunities
These are external avenues that are open to grow business
They could be new market opportunities, increase in general income levels, improvement of infrastructure, etc
Opportunities are:
Largely external
Largely non-controllable from within (we respond to opportunities though in a few cases we can create opportunities)

6. Threats
These are external competitive or non-competitive factors that hinder achievement of short as well as long-term goals of a firm.
Threats are:
External in nature
Largely non-controllable from within (we respond to threats with strengths)

7. Using SWOT as a Strategic Tool
All firms need to identify and quantify their present as well as potential SWOT positions in order to plan ahead
This starts with an in-depth and broad analysis of:
The self
The market
Competitors
Other environmental factors (e.g. culture, economic factors, etc)
This is called Environmental Scanning

8. Identifying SWOT Factors
Identify at least ten Strengths, Weaknesses, Opportunities and Threats each in their order of effect.
For example, poor/low technology in a bank would rate very highly (strong weakness) as compared to internal squabbles between two junior officers (weak weakness)
Categorize these as strong or weak depending on their effect (positive or negative) on performance

9. Quantifying SWOT Factors
Each listed SWOT factor should then be given a relative weight within its category
For example out of a total weight of 10, low technology may be given 7 if it is the main weakness while squabbles between junior managers gets 2 out of 10.
These weights represent the extent of effect on performance by the factor
Then add up all weights to get the total effect of each SWOT category on performance.

10. Decision Making from SWOT Analysis
From the totals it is possible to establish where the organization needs to focus its strategies.
For example, if the total strength factor is high relative to the threat factor and if the opportunity factor is also as high the firm can take high risks in the foreseeable future
These effects can be cascaded down the organization’s structure as need demands for further decision making

11. Benefits of SWOT Analysis
Helps to assess the firms internal capacity against external environmental factors
Provides a factual basis for planning and decision making
Provides a basis for resource allocation and reallocation
Reduces chances of resource wastage by providing focus
Reduces chances of strategy failure

12. Exercise Identify an existing organization of your choice
List ten strengths, weaknesses, opportunities and threats respectively
On a range of 1-10, 10 being the highest in terms of importance allocate weights for each attribute (e.g. for each strength)
Add the weights for each category

13. Exercise Determine: The strength/ weakness factor
The threat/ opportunity factor
The overall favorability factor

14. SWOT MATRIX Strengths Weakness Opportunities S-O Strategies
W-O Strategies
Threats
S-T Strategies
W-T Strategies

15. S-O Strategies: Pursue opportunities that are a good company’s fit to the company’s strengths
W-O Strategies: Overcome weaknesses to pursue opportunities
S-T Strategies: Identify ways to use strengths to reduce vulnerability to external threats
W-T Strategies: Establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats

16. End